Merger Creates Wall Street’s Largest Farmland REIT

DTN Executive Editor Marcia Taylor reported yesterday that, “Farmland Partners Inc. CEO Paul Pittman created shockwaves with the purchase of 22,300 acres of Illinois farmland earlier this year, the state’s largest single purchase ever. The institutional investor’s spree in U.S. farmland continued Monday, as Pittman’s company announced it was merging rival American Farmland Company (NYSE: AFCO) into its cropland kingdom.

“While still modest in size for a New York Stock Exchange-traded REIT, the merger will create the largest U.S. farmland real estate investment trust (REIT) ‘by miles,’ Pittman told DTN in an interview.”

Ms. Taylor added that, “Investor interest in farmland soared during grain market highs over the past decade. But American Farmland’s stock has been undervalued since its public launch, trading about $6 per share when its underlying assets were worth $9 per share, Pittman said. He said the firm’s assets were sound, but the company was too small and carried too much overhead.

“Until now, Farmland Partners (NYSE: FPI) concentrated on acquiring row-crop farms that raised corn, soybeans, wheat and cotton, largely in the Midwest, Plains and Delta. American Farmland’s smaller portfolio specialized in permanent crops such as almonds and oranges. The combined entity will consist of approximately 75% row-crop farmland and 25% specialty crops by value. Farmland Partners expects to consolidate American Farmland’s operations into its existing Denver-based headquarters and realize significant cost savings by trimming administrative and overhead costs.”